Lionel Fishman Matthew Burt January 2 2023 Crocs v Double Diamond Distribution: Federal Court reaffirms strength of industrial design rights and remedies in Canada Smart & Biggar | Intellectual Property - Canada Lionel Fishman, Matthew Burt Intellectual Property IntroductionFactsDecisionCommentIntroductionIn Autumn 2022, the Federal Court of Canada issued a rare decision concerning industrial design infringement and reaffirmed several points of law favouring holders of industrial design registrations in Canada seeking to enforce their rights.In Crocs Canada Inc v Double Diamond Distribution Ltd,(1) released on 21 October 2002, the Court found that Double Diamond Distribution Ltd (Double Diamond) had infringed an industrial design registration owned by Crocs Canada Inc (Crocs) related to its clog-style footwear.The Court showed a willingness to uphold the validity of an industrial design registration despite inconsistencies in the drawings contained therein, reaffirmed that infringement and validity are to be assessed from the perspective of the informed consumer, and reinforced the strength of the accounting of profits remedy.FactsAt issue was Crocs's Industrial Design Registration No. 120,939 (the 939 design) for its MAMMOTH line of clogs. Figure 1 of the 939 design is reproduced below, alongside a photograph of an exemplary MAMMOTH clog embodying the design.Figure 1: Crocs MAMMOTH clogSince 2008, Double Diamond, a Saskatchewan corporation, had offered for sale and sold in Canada "Fleece Dawgs", a line of clog-style footwear (Figure 2).Figure 2: Fleece Dawgs clogIn November 2017, Crocs filed suit against Double Diamond, asserting infringement of the 939 design. Double Diamond denied infringement and counterclaimed for invalidity. The central issues were thus whether the 939 design was valid, and if so, whether Double Diamond had infringed the registered design.DecisionValidityDouble Diamond attacked the validity of the 939 design on several grounds, including on the basis that the 939 design allegedly included multiple, distinct designs contrary to the Industrial Design Act and Regulations. The Act and Regulations permit variants of a design in a single registration but not distinct designs. Double Diamond noted that there were discrepancies and inconsistencies in the figures, including in the placement of the fleece collar in Figure 1 as compared to Figure 4 of the 939 design. As shown below, the highlighted portion is partially obscured by the fleece in Figure 4 but is unobscured in Figure 1.Figure 3: Figures 1 and 4 of the 939 designHowever, the Court, relying on expert evidence adduced by Crocs, concluded that Figure 4 was simply an insubstantial variation in which a portion of the fleece collar was displaced, and not a wholly separate design. Double Diamond did not put forward an expert of their own.InfringementThe proper test for infringement of an industrial design was not in dispute: the Court had to determine whether the allegedly infringing design differed substantially from the registered design.This analysis involves the following steps:Examine the prior art and the extent to which the registered design differs from any previously published design. The closer the registered design is to the prior art, the narrower the protection it will be afforded, and vice versa.Assess the design for any utilitarian function or any method or principle of manufacture or construction.Examine the design itself to determine the scope of protection based on the figures and accompanying description in the registration.Conduct a comparative analysis of the registered design and alleged infringing article, taking the first three factors into account.The Court confirmed that the infringement analysis had to be assessed from the perspective of the informed consumer who – importantly – was deemed to be familiar with the relevant market and prior art, rather than the consumer with an imperfect recollection. Crocs's expert evidence as to the knowledge of an informed consumer assisted the Court, which accepted that the 939 design was entitled to a broad scope of protection because there was nothing like it in the prior art.Ultimately, Double Diamond's Fleece Dawg products were found to infringe.Accounting of profitsAn accounting of the infringer's profits is a remedy provided for by the Industrial Design Act. However, Double Diamond alleged that Crocs's delay in initiating the proceedings – namely, roughly nine years after the launch of the Fleece Dawgs shoe in Canada – disentitled Crocs to a finding of infringement and any associated remedies, including an accounting of profits.The Court was unwilling to disallow Crocs's claim or entitlement to the accounting of profits remedy. The Court appeared to be more concerned with Double Diamond's own delay in raising this argument until trial and was otherwise not convinced that Double Diamond had established any bar to the equitable relief of an accounting of profits elected by Crocs.Additionally, Double Diamond had failed to adduce sufficient evidence regarding the alleged expenses attributable to Fleece Dawgs footwear. As a result, Double Diamond was effectively required to disgorge to Crocs their gross sales of its Fleece Dawgs products over the relevant period.CommentThis decision has provided valuable guidance on the analysis of validity and infringement of an industrial design registration in Canada, as well as highlighting the importance of expert evidence in such cases.For further information on this topic please contact Lionel Fishman or Matthew Burt at Smart & Biggar by telephone (+1 613 232 2486) or email ([email protected] or [email protected]). The Smart & Biggar website can be accessed at www.smartbiggar.ca.Mimoza (Mimi) Gjelaj, articling student, assisted in the preparation of this article.Endnotes(1) 2022 FC 1443.